Medicare: Observations on Program Sustainability and Strategies to Control Spending on Any Proposed Drug Benefit
Highlights
The House Committee on Ways and Means is holding a hearing on modernizing Medicare and integrating prescription drugs into the program. There are growing concerns about gaps in the Medicare program, most notably the lack of outpatient prescription drug coverage, which may leave Medicare's most vulnerable beneficiaries with high out-of-pocket costs. At the same time, Medicare already faces a huge projected financial imbalance that has worsened significantly in the past year. This statement discusses the challenges of adding a drug benefit to Medicare in the context of the program's current and projected financial condition. It also examines program design issues to be considered with respect to administering any proposed drug benefit. Specifically, it discusses how private sector health plans have used entities called pharmacy benefit managers (PBM) to control drug benefit expenditures.